NEWS Original Equipment Suppliers Association
GM Purchasing/Supply Chain Town Hall April 27, 2022
IN THIS ISSUE... 1 On Your Behalf by Julie A. Fream 2 Retooling for a Product and Human Capital Reset 5 Peer Group Councils - ATC 7 MEMA Spring into Advocacy Month
8 OESA Events 12 Listen Now - Automotive Insiders Podcast 13 New OESA Members 14 OESA Event Calender
2022 Second Quarter │ Edition 1
Warner Legal Corner AUTOMOTIVE LEGAL TOPICS Volume Three, April 2022
Preparing for Local Business Impacts of the War in Ukraine
ATTORNEY SPOTLIGHT
As the war in Ukraine intensifies and sanctions take effect, your business will likely be impacted either directly or indirectly – so it is best to prepare ahead of time. Below are the likely near-term impacts and ways to prepare for them.
Homayune Ghaussi
Payments. Many of the first rounds of sanctions target Russian banks and banking services. These sanctions could significantly impact the ability to make or receive payments for companies involved with Russian businesses and Russian banks. You should explore payment alternatives now.
Warner Partner Homayune Ghaussi focuses dually on both supply chain litigation and commercial contract negotiation, primarily for automotive suppliers. Having worked with the automotive industry for 18 years, he regularly represents clients in complex litigation and commercial disputes, including through jury trials and arbitration hearings.
Adequate assurance of performance. Whether it is payment or performance of other contractual obligations, if you have concerns about businesses in your supply chain being affected by these sanctions and becoming unable to perform, you should consider requesting adequate assurance of performance under Section 2-609 of the Uniform Commercial Code. But first, review your contracts to make sure you follow any provisions addressing parameters and notice requirements for seeking such assurance. And if your supply chain is affected by these sanctions, be ready for your customers or suppliers seeking such assurance from you. Both requesting assurance and responding to such requests have potentially significant consequences if not properly done. Address these requests with appropriate due diligence. Force majeure. If you determine your ability to supply will be affected, consider a force majeure notice to preserve your defense against a breach claim. And if you receive such a notice, review your contract to determine your rights and alternatives. Consider UCC 2-615 if your contract does not include a force majeure clause.
For more information from Warner’s Automotive Industry Group, visit their webpage or log onto www.wnj.com.
Michael Brady
Partner mbrady@wnj.com 313.546.6032
Tom Manganello
His preference is to step in earlier to: “Spend a few hours in the outset, reviewing and understanding your contracts to reduce the risk of spending months or years with us in litigation at the end.” It’s his litigation experience, however, that gives Homayune valuable insight into how those contracts are likely to be interpreted if a problem arises. An executive at a Tier 1 automotive supplier, who regularly retains Homayune to better understand potential legal ramifications of its customer contracts, describes his advice as invaluable. “It allowed us to proactively address issues with our customer that we would have missed had we not had his guidance.” Homayune has been named among the Best Lawyers in America® in Commercial Litigation; a Top Lawyer in Litigation and Commercial and Intellectual Property Law by Dbusiness; and a Michigan Super Lawyer. He serves as the chair of Warner’s Supply Chain Litigation Practice Group and on the firm’s Management Committee and Pro Staff Committee. In 2014, he won Warner’s “Mentor of the Year Award” that is given to a partner who goes above and beyond in mentoring associates at the firm. Check out Homayune’s full bio here.
Partner tmanganello@wnj.com 313.546.6007
Elaine Taylor
Business Development etaylor@wnj.com 586.876.4045
Click here to access Warner’s Legal Corner Resource Page on OESA’s website.
On Your
Behalf
Leadership During Crises
What a difference a month makes. As I write this article, it has been exactly one month since Russia invaded Ukraine. The human toll and the mass destruction have been devasting for the Ukrainian people.
And, as with many global issues, the automotive industry is feeling the impact of this war. In the midst of this devastation, I continue to be inspired by the overwhelming response from suppliers to find ways to support their employees – in both Ukraine and Russia. The efforts to help a company’s global “family” demonstrate the commitment and respect for all people that makes me – and many others – proud to be part of the automotive community. Thank you to all the organizations finding ways to help in this time of need. The next variant of coronavirus also emerged this past month. While lockdowns currently appear to be limited to China, the shutdown and/or minimal operation of Chinese automotive suppliers will, once again, be felt globally. Suppliers that operate in the North American region need to understand the potential impact on their organization and be prepared to manage through the global effect of the variant. In March, devastation struck Fukushima again, in the form of a 7.4 magnitude earthquake. Thankfully, the destruction and human impact are far less extensive than the 2011 earthquake in the same region. However, several semi-conductor facilities were shut down for several days for inspection and repairs, impacting the output and flow of semi-conductors for the global industry. Although the plants were quickly brought back online, this shutdown will impact production for some time due to lost work in process. While there are more global crises that can be listed, it is safe to say that the industry continues to cope with unprecedented issues causing significant disturbances in the supply base. Even during uncertain times such as these, I am always amazed at the extraordinary efforts of the global automotive supplier industry. As the industry navigates these crises, your effort and support demonstrate the strength, fortitude, and leadership necessary in these challenging times. Thank you for making a positive impact on the lives of the many people that depend on this industry. As always, please feel free to contact me at 248.430.5963 or jfream@oesa.org.
Julie A. Fream President and CEO OESA
OESA News - 2022 First Quarter
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INDUSTRY INSIGHT
Retooling for a Product and Human Capital Reset Mike Jackson Executive Director, Strategy and Research 248.430.5954 │ mjackson@oesa.org
In the spirit of March Madness, the first quarter of 2022 may not have gone according to plan, yet let me reassure you, we have three quarters left to make course corrections to finish this year strong. Even as the industry moves resolutely forward, we continue to face a raft of challenges as supply chain constraints and geo-political events persist, stretching our global teams and requiring a rework of our most sophisticated plans. To be clear, the recent earthquake in Japan and Russia’s invasion of Ukraine inflict an agonizing human toll while calling for our best efforts to lend support and solve problems. If we’ve learned anything over these past two years in the wake of COVID, the global semiconductor and supply crises, it is that ingenuity shines brightest in our most difficult moments. As an industry, we’ve played a crucial vital role in providing planning, support and expertise to solve problems and keep moving forward despite persistent disruptions. Executives began the year with good reason for renewed optimism, as North American production forecasts called for 2 million units of incremental output from 2021, to eclipse the 15-million-unit mark. Though industry threats have since pulled forecasts lower, for the first time in three years, production levels remain poised to eclipse supplier breakeven levels by nearly one million units. As ever, the new year brings new product launches which now increasingly skew electric. New vehicle offerings poised to launch or ramp up in the near-term include a disproportionate share of EVs, including: Rivian R1S, VW ID4, Cadillac Lyriq, Equinox EV, and the Ford Lightning. While we are still in the early days of battery electric vehicle adoption, we are approaching an inflection point as products arriving to market provide far greater product and segment coverage while meeting varied usage requirements. Moreover, new BEV entries integrate far more technology that draws on the shift to electrification, requiring new supplier solutions and enabling dynamic capabilities. Ford’s Chief Industrial Platform Officer, Hau ThaiTang emphasizes this point, explaining how new capabilities on the Ford Mustang Mach-E have helped redefine value and enhance the customer relationship.
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"In the past you buy a car and as soon as you drive it off the lot, it starts to depreciate. Now [with the MachE's over-the-air updates] we can really change that. We are working on a lot of new things that make the product better over the life of ownership." (Driving with Dunne - Hau Thai-Tang: The Inside Story of Ford's Gigantic Bet on Mustang Mach-E, March 30, 2022). These new elements of value come together by combining connectivity, convenience and safety to harness the power of electronics and software to imagine a more refined user experience. Software is now integral to the entire user experience, shifting from user interfaces to embedded control over all aspects of vehicle functionality as well as a myriad of new data streams and prospects for monetization strategies. The new Cadillac Lyriq luxury EV crossover features a massive 33” diagonal advanced LED display, enveloping the driver to enable driver assistance technology, infotainment functionality, performance enhancements and more. Automakers and suppliers will play a key role by adding the right talent to ensure that product development and optimization continue to accelerate organizational capabilities by consistently applying new learning. To this end, new solutions require new skills and capabilities. Leaders tasked with creating and executing these capabilities are recruiting talent with experience from technology, gaming and entertainment, where such business models continue to evolve and mature. To support the need for a deeper understanding of such opportunities, OESA will showcase this topic at our next Strategic Insights Executive Series: EV Sector Learning – Driving Momentum and Scale on May 5, 2022. Escalent, will share detailed EV-focused research linking buyer attitudes & behavior, technology adoption and purchase drivers to help suppliers and automakers learn from early efforts to add even greater value. Experts from Deloitte Consulting LLP will also share deep insights from their latest global consumer survey on BEVs. As the industry races to add value from new data streams, join us to gain clarity on who will build, own, and monetize opportunities from Deloitte’s industry leaders. See page 9 for more information or click here to register for this program. Keep a close eye on the market in 2022 as the pace of progress toward electrification accelerates.
To learn more about automotive supplier sentiments and economic and industry trends, contact Mike Jackson, Executive Director, Strategy and Research, at mjackson@oesa.org. OESA News - 2022 First Quarter
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Producing innovative elastomers since 1950, ZEON is a world leader in specialty elastomers, polymers, and chemicals. As one of the top producers of rubber in the world, we operate eight production facilities across Asia and North America with four research and development laboratories in the United States, Japan, China, and Singapore. Assisting customers from concept discussion to prototyping, pre-launch, mass production, and beyond, ZEON is a truly global network of supply and technical support for producers of rubber products.
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OESA PEER GROUP COUNCIL NETWORK
OESA Advanced Technology Council Update Brian Daugherty Chief Technology Officer 248.430.5966 │ bdaugherty@mema.org
On April 12th, the OESA Advanced Technology Council (ATC) will hold its Q2 meeting at the American Center for Mobility. In addition to touring the test tracks and lab facilities, the council will hear from Toyota and Perrone Robotics on their R&D efforts at ACM. VSI Labs will provide demonstrations of ADAS and AV sensors/hardware and their capabilities including Lidar, cameras (RGB, thermal, NIR), radar (including HD radar), precise geo-positioning, and high-performance computing. If these are topics of interest to your company, you or someone from your firm are welcome to join the council to stay abreast of these and other vehicle technology issues. Council members are typically the top technology executives from OESA member companies including CTOs, Directors/ VPs of Engineering or R&D, and Chief Strategy Officers – anyone leading their company’s charge on advanced technology or heading up a technology area at a large supplier. The ATC is the primary council for discussing vehicle technologies and it is co-led by Brian Daugherty, MEMA’s CTO, and Steve Horaney, OESA’s VP of Membership and Sales. There are four quarterly meetings with guest speakers and excellent peer-to-peer discussions. Discussion topics revolve around four main areas: 1. Automated Driving Systems (ADS) and Advanced Driver Assistance Systems (ADAS) technology – including Sensors, Software, and Electronics 2. Vehicle Cybersecurity, Software, and Network Architectures 3. Vehicle Connectivity including Vehicle-to-Vehicle Communication (V2V, V2I, V2X), Over-the-Air (OTA) Updates, Human-Machine-Interface (HMI), Telematics, and Connected Infotainment 4. Fuel Economy and Advanced Propulsion including Battery Electric Vehicle (BEV) technology, Hybrid vehicle technology, Alternative Fuels, Corporate Average Fuel Economy (CAFE), Green House Gas (GHG) related topics, Light-weighting, Advanced Materials, and Advanced Internal Combustion Engine (ICE) Technology Remaining ATC dates for 2022 are: • April 12 • July 12 • October 20 Click here for additional information on the OESA Advanced Technology Council. If you are interested in joining the ATC, please contact Brian Daugherty at bdaugherty@mema.org or Steve Horaney at shoraney@oesa.mema.org. We hope to see you at our next council meeting.
Learn more about all OESA Peer Group Councils at oesa.org/councils-and-committees. OESA News - 2022 First Quarter
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MEMA SPRING INTO ADVOCACY
MEMA is excited to announce its month-long Spring Into Advocacy event, happening in May of this year! We are also delighted to announce this year’s event will include an in-person component from May 10th-11th, for guests who register for the fly-in week. This two day event will include amazing opportunities for professional networking, advocating policy on Capitol Hill, and multiple chances to hear from leading experts on a variety of topics that will help inform you of important policy decisions that could impact your organization. Spring Into Advocacy events focus on a wide array of topics including policy discussions on the environment and emissions, trade, vehicle safety, and workforce development, political discussions with a focus on the midterm election, and much more! Our goal is to provide you with the tools necessary to understand and participate in government affairs. We look forward to continuing to provide excellent service and opportunities to our members, and the chance to grow together in advocacy. For more information and to register for this event, click here. For any additional questions on registering for the Spring Into Advocacy events, please contact Joshua McGuire at jmcguire@mema.org. Please note: Additional speakers will be added as they are confirmed.
OESA News - 2022 First Quarter
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OESA EVENTS
GM Purchasing/Supply Chain Town Hall
April 27 | 12:00 - 4:00 p.m. | Detroit Renaissance Center Marriot & via Zoom General Motors recently made headlines at the 2022 Consumer Electronics Show when it announced its plans for new EVs and shared its progress on autonomous vehicles. GM is committed to have a fully resilient, sustainable, scalable and cost-competitive supply chain to support all of its EV production in North America. To learn more about GM’s plans for the future, OESA is pleased to host the 17th Annual OESA Members-Only General Motors Purchasing/Supply Chain Town Hall on April 27, 2022. The event will be held in person at the Detroit Renaissance Center Marriott and via Zoom. Jeff Morrison, vice president, global purchasing and supply chain, General Motors, and other GM executives will share current initiatives that will help enable GM’s vision of zero crashes, zero emissions and zero congestion. Following formal presentations, the GM team will participate in a panel-style Q&A session moderated by Julie A. Fream, President and CEO, OESA. In-person attendees will have the opportunity to participate in one-on-one networking opportunities with GM executives from various commodity groups, including: •
Global Supply Chain
•
Logistics & Containers
•
Program Management
•
Chassis & Body Structure
•
Interior & Exterior
•
Electrification, Software, Infotainment & Connectivity
•
Electrical Controls & Architecture, Automated & Advanced Technologies
•
Engine, Transmission & Thermal
•
Strategy Planning & Operations
•
Sustainability / ESG
•
Customer Care & Aftersales & Warranty
•
Purchasing & Manufacturing Services
OESA members interested in learning more about GM’s plans and sourcing opportunities are encouraged to attend. Networking Sponsor:
Industry Sponsor:
Industry Sponsor:
8 │ OESA News - 2022 First Quarter
OESA EVENTS
Strategic Insights Executive Series: EV Sector Learning: Driving Momentum and Scale
May 5 | 8:30 - 11:00 a.m. | OESA Conference Center, Southfield, MI and virtually via Zoom OESA invites industry and strategy professionals to attend the 2022 Strategic Insights Executive Series: EV Sector Learning - Driving Momentum and Scale on May 5, 2022. This event is the second of two executive briefings addressing actionable insights in electrification and the EV sector. It will be presented in person at the OESA Conference Center in Southfield, MI and via Zoom. The Series discusses the dramatic pace of industry change, technology advancement, sales volatility, and production sourcing dynamics. Attendees will gain intelligence from industry experts within forecasting, consumer & product research, leading automakers, and premier industry consultants. Ben Lundin, Senior Insights Manager, Automotive and Mobility, Escalent, will share detailed EVfocused research linking buyer attitudes & behavior, technology adoption and purchase drivers to help suppliers and automakers learn from early efforts to inform and accelerate processes to add even greater value. Experts from Deloitte Jason Coffman, U.S. Automotive Consulting Leader, Deloitte Consulting LLP, Ryan Robinson, Automotive Research Leader, Deloitte LLP, Ashok Divakaran, Connected Autonomous Vehicle Leader, Deloitte Consulting LLP, and Vaidyanathan Anantharaman, Supply Chain and Engineering Service Specialist Leader, Deloitte Consulting, LLP, will share insights from its latest global consumer survey on BEVs. Learn how software-defined vehicle momentum is building upon electrification efforts to meet consumer expectations. Attendees will also hear from a leading OEM on how new approaches to identify consumer needs and foster supplier collaboration have helped achieve product breakthroughs, elevate user experience, and enhance customer value.
Event Sponsors:
OESA members and industry guests may register for OESA events at www.oesa.org. For registration assistance, contact OESA at 248.952.6401 or info@oesa.org. OESA News - 2022 First Quarter
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OESA EVENTS
South Carolina Regional Supplier Meeting
May 12 | 11:45 a.m. - 4:30 p.m. | CU-ICAR - Greenville S.C. The Original Equipment Suppliers Association (OESA) and South Carolina Automotive Council (SCAC) invite suppliers and industry guests to attend the OESA /SCAC 2022 South Carolina Regional Supplier Meeting on May 12, 2022. The event will be held at the Clemson University International Center for Automotive Research (CU-ICAR) in Greenville, S.C. Attendees will hear the industry’s latest trends, decisions and events that are making a direct impact on the North American light vehicle industry. Topics include the automotive outlook, disruptions in the supply chain, labor and workforce issues, legislative and regulatory issues in Washington, D.C, as well as insights from Volvo Car USA’s South Carolina operations. Catherine Boland, vice president, legislative affairs, Motor & Equipment Manufacturers Association (MEMA), will provide an update on issues impacting suppliers in Washington, D.C. Topics will include an update on the semiconductor shortage, shipping port delays, and the recent decisions on Capitol Hill. Zainab Hazimi, associate, Warner Norcross + Judd, will address the mounting workforce challenges for employers and HR professionals as their personnel return to in-person work, as well as implications of workplace safety, vaccine mandates, employee leave issues and some recent employment litigation trends. Katie Pullen, partner, Warner Norcross + Judd, will share best practices and strategies for dealing with the ongoing supply chain strains including price increase demands, component and raw material shortages, shipping issues, commercial impracticability claims, volume shortages, ever-changing production schedules and preliminary injunction threats. Joe McCabe, president, AutoForecast Solutions, will share the latest AFS production outlook as well as discuss the industry transition from ICE to BEV. The day will conclude with an update from Todd Brower, head of Procurement, VOLVO CAR USA. He will share his insight on the industry’s landscape and Volvo’s sourcing needs and plans for the future. Event Sponsors:
OESA members and industry guests may register for OESA events at www.oesa.org. For registration assistance, contact OESA at 248.952.6401 or info@oesa.org. 10 │ OESA News - 2022 First Quarter
OESA EVENTS
OESA SAA 13th Annual Purchasing Summit
May 24 | 8:00 a.m. - 12:00 p.m. | Marelli North America Inc - Southfield, MI and virtually via Zoom The Original Equipment Suppliers Association (OESA) and the Society of Automotive Analysts (SAA), in cooperation with Plante Moran, will present the OESA / SAA 2022 13th Annual Purchasing Summit on May 24, 2022. This event is hosted by Marelli. Leaders from Plante Moran will share key highlights from the latest Plante Moran North American Automotive OEM-Supplier Working Relations Index® (WRI®) Study. Following, purchasing executives from Ford, GM, Honda, Nissan, and Toyota will provide commentary on the study results and answer questions from event participants. Attendees will learn: •
How the industry crises of 2021 tested OEM and supplier relations
•
Which OEMs were favored by suppliers in managing through these crises
•
Which OEMs improved as the suppliers' customer of choice
•
How accelerated electrification product plans inject risk in commercial relations and supplier responses
•
How supplier relations impact OEM and supplier bottom lines
Following the panel, in-person attendees will have the opportunity to network with OEM purchasing executives in attendance.
Presenting Sponsors:
OESA News - 2022 First Quarter
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AUTOMOTIVE INSIDERS...LISTEN NOW OESA and automotive industry expert Jason Stein have joined forces to present an all-new podcast focused on the automotive industry. The Automotive Insiders hosted by Jason Stein covers a broad-range of industry topics and trends that are impacting the future of automotive. Jason interviews some of the industry’s key thought leaders and insiders. The podcast is available on Amazon Music, Apple Podcasts, Google Podcasts, iHeartRadio, Spotify, Stitcher, and Pandora. New episodes are featured weekly. To subscribe and listen, click here.
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OESA MEMBERSHIP BRC Rubber & Plastics, Inc.
DESTACO
Member Representative: Brad Chaffee, VP Sales & Marketing Alternate Representative: Mike Meyers, Executive VP
Member Representative: Thomas Stimac, Regional Sales Manager - Automotive Alternate Representative: Mark Heacock, Sales Engineer
Google Cloud
HDT Automotive Solutions
Member Representative: John Nantau, Director, Automotive Sales Alternate Representative: Raj Grover, Head of Google Cloud, Sales Engineering
Member Representative: Robert Wilson, Chief Commercial Officer
NNG North America, Inc.
Papp Plastics and Distributing Limited
Member Representative: Erica Ochs, Vice President Americas Alternate Representative: Jill Foster, Office Administrator
Member Representative: Michael Papp, President
Promax Engineering, LLC
Rifast
Member Representative: Thomas Hendricks, Account Manager Alternate Representative: Lesley Qian, Director of Sales
Member Representative: Mark Rocheleau, Tier Key Account Manager Alternate Representative: Rick Garpow, Director of Sales
1089A W. State Blvd. Fort Wayne, IN 46808 www.brcrp.com
15 Corporate Drive Auburn Hills, MI 48326 www.destaco.com
1600 Amphitheatre Pkwy Mountain View, CA 94043 www.cloud.google.com
9211 S Main Street Plymouth, MI 48170 www.nng.com
6035 E Executive Dr Westland, MI 48175 www.promaxeng.com
38701 Seven Mile, Rd, Suite 265 Livonia, MI 48152 www.hdt-auto.com
6110 Morton Industrial Pkwy LaSalle, ON N9J 3W3 www.pappplastics.com
28700 Cabot Drive, Suite 700 Novi, MI 48377 www.RIFAST.com
For OESA membership information, contact:
Steve Horaney Vice President, Membership and Sales 248.430.5969 shoraney@oesa.org
Erin Schrieber Senior Manager, Membership Recruitment and Development 248.430.5970 eschrieber@oesa.org
Adam Slaman Senior Manager, Sponsorship Sales and Membership Development 248.430.5958 aslaman@oesa.org OESA News - 2022 First Quarter
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OESA EVENTS Upcoming OESA Events: Apr. 27
GM Purchasing/Supply Chain Town Hall
May 5
Strategic Insights Executive Series: EV Sector Learning: Driving Momentum and Scale
May 12
South Carolina Regional Supplier Meeting
May 24
13th Annual Purchasing Summit
Upcoming 2022 OESA Town Hall Meetings
Mark your calendar for the Members-Only OEM Town Hall Meetings
April 27
GM Town Hall
July 27
Toyota Town Hall
Sept. 20
Honda Town Hall
Nov. 29
Ford Town Hall
Upcoming Council Meetings: Apr. 6
Automotive Public Relations Council
Apr. 12
Advanced Technology Council
Apr. 14
Tooling Council Council
Apr. 19
Legal Issues Council
Apr. 21
Human Resources Council
Apr. 26
Young Leadership 9 Council
Apr. 28
Emerging Leadership Council
14 │ OESA News - 2022 First Quarter
COUNCILS Insight from the McDonald Hopkins Automotive Practice Group
Automotive industry outlook: Planning for the changes ahead
The auto industry has experienced extreme change over the past few years. Just over two years ago, volumes were projected to remain stable and the industry was considering both a long-term conversion to EV and the impacts of automated driving. Today, as a result of COVID, North American volumes plummeted and are not expected to return to pre-pandemic levels until 2023 or 2024. Nevertheless, even with a partial recovery to about 15 million units in North America, OEM profits are solid. The total retail spend on new cars is up 13% due to prices increasing 29%. The OEMs also now operate with less inventory and are not likely to return to prior inventory levels anytime soon. The situation for suppliers, who mostly have been unable to increase prices, is quite different. Not only do suppliers now have to contend with reduced volumes, they must do so with little ability to plan. To allocate scarce chips to profitable vehicles, OEMs have developed a pattern of stopping and starting production, especially for lower priced vehicles. These changes are frequently done with little notice, making it difficult or impossible for the supply base to operate efficiently – especially when combined with other supply chain weaknesses. The fragility of the just-in-time system is being tested and, in many cases, exposed. Recently, the shutdown of the Ambassador Bridge resulted in OEM plant shutdowns within 24 hours. On top of the stop-start-stop scheduling, suppliers are contending with increasing material and labor costs, and staffing issues (especially at the tier 2 and 3 levels where liquidity is often less available), as well as difficulties in procuring materials to meet customers’ just-in-time needs. Suppliers with facilities in the EU and elsewhere are also constrained by the near impossibility of reducing employment to efficient levels, and have an even more difficult time closing unprofitable facilities. With volumes not expected to return to pre-pandemic levels until 2023 or 2024, suppliers are left with many months of managing both liquidity (especially if interest rates increase as projected) and increasing production (unless material supply chains and customer scheduling improve).
By Stephen M. Gross
McDonald Hopkins PLC Chair, Automotive Practice Group Co-Chair, Business Restructuring Department
Coupled with these short-term issues, OEMs have accelerated the move to EV. Over 200 EV launches are planned by 2028, with nearly half being new vehicles. The OEMs’ stated timeline for the transition continues to shorten. Most OEMs intend to have the bulk of their production be EV by 2030 or 2035. Ford has even announced that it will split its EV and ICE production into separate business units. However, unlike the industry’s growth over the past 100 years that was fueled by market demand, actual market demand for EVs is still speculative. Absent cost reductions to make EVs more affordable, subsidies will be required to support volumes. Forcing a migration of a relatively constant volume of vehicles from ICE to EV over a period of only a few years will dramatically
impact the supply base. Numerous constituents will be producing parts for ICE vehicles at reduced levels, with these suppliers needing significant capital to create or acquire EV component production capacity. Suppliers for EVs will have to anticipate reduced volumes, when sales of new EV models increase (if they increase). These dynamics make maintaining production and cash flow difficult and planning almost impossible for suppliers; however, auto suppliers have demonstrated time and time again they are resilient. While these conditions will create supply disputes, liquidity issues, and lead to consolidation, they will also result in opportunities. Change always creates winners and losers. About our Automotive Practice Group McDonald Hopkins has successfully advised automotive suppliers for over 40 years. Whether the issue is the need for price increases, IP licensing, supply disputes, mergers and acquisitions, HR and employment matters, regulatory matters, or obtaining new capital, we have experienced attorneys ready to assist to enable our clients to avoid a crisis and to prosper.
mcdonaldhopkins.com 39533 Woodward Avenue, Suite 318, Bloomfield Hills, Michigan 48304 This content (©2022 McDonald Hopkins PLC All Rights Reserved) is designed to provide current information regarding important legal developments. The foregoing discussion is general information rather than specific legal advice. Because it is necessary to apply legal principles to specific facts, always consult your legal advisor before using this discussion as a basis for a specific action. This material is not intended to create, and your receipt of it does not constitute, an attorney-client relationship with McDonald Hopkins.
OESA News - 2022 Fourth Quarter
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Original Equipment Suppliers Association 25925 Telegraph Rd., Ste. 350 │Southfield, MI 48033-2553 248.952.6401 │oesa.org │info@oesa.org Connect with us on OESA News is provided by the OESA Communications Team. April Buford Executive Director, Marketing & Communications 248.430.5964 abuford@oesa.org
Abby Napier Communications Specialist
Lexi Putman Member Services Representative
248.430.5957 anapier@oesa.org
248.430.5959 lputman@oesa.org
